WHAT’S AT STAKE FOR THE CHINA-SOUTH ASIA EXPO?

PROSPECT Journal is collaborating with East by Southeast, a new blog focusing on China and its neighbors in Southeast Asia. As part of this collaboration, PROSPECT will be intermittently publishing articles by the East by Southeast bloggers, who all live and work in the region. Our journal is excited to bring a wider range of expert analysis of Southeast Asian affairs to our readers.

The China-South Asia Expo opened without a hitch yesterday in Kunming despite online calls for a continuation of environmental protests outside of the Expo’s opening ceremony site. It seems protesters decided to stay home due to a combination of sticks and carrots offered by local authorities. On June 3, Kunming’s mayor announced the release of key environmental impact assessment data concerning the construction of a PetroChina oil refinery and PX chemical plant side project scheduled for construction 40 km from the city’s downtown area. Also, the excessive presence of armed and unarmed public security officers lining the city’s streets and manning the Expo site also likely turned protesters away.

What is the rationale behind the excessive security measures? What’s really at stake at the 1st China-South Asia Expo?

The Expo, a combination trade fair and high level forum for investment and trade promotion discussions between China, Southeast Asia and now South Asia, is part of China’s “Bridgehead Construction” strategy to establish Kunming and Yunnan province as a gateway between China and its neighbors to the south and west. A smoothly running Expo not only will seal multilateral agreements and high-value business deals that will streamline regional trade and investment, but it will also guarantee the continuation of soft-budget infrastructure development projects sponsored by Beijing to Kunming and Yunnan province that are part and parcel of the “Bridgehead” strategy.

The event is critically central to China’s plans for regional economic integration, so much so that Premier Li Keqiang, coming off a series of trade promotion visits to South Asian countries, was purportedly scheduled to attend yesterday’s opening ceremonies. But to many a Kunminger’s disappointment, Li Keqiang didn’t show up, and Vice Premier Ma Kai was sent in his stead.

The Expo is the continuation and augmentation of the long-running Kunming Import and Export Fair with a twist due to an ongoing provincial rivalry in China. The Kunming Fair focused on trade promotion and relations with mainland Southeast Asian nations, but in 2005, Yunnan’s neighbor, Guangxi became jealously vocal toward the volume of central level funding pipelined to Yunnan for improving relations with China’s Southeast Asian neighbors as part of the bridgehead construction strategy.

The antagonism makes sense to a degree given Guangxi’s border with Vietnam and its maritime orientation toward Malaysia, Indonesia, and the Philippines. As a result, the Guangxi provincial government gained responsibility for trade and investment relations with ASEAN states and Yunnan’s responsibilities were curbed to its mainland Southeast Asian neighbors. After years of lobbying to the central government in Beijing, Yunnan’s provincial officials gained a one-up over Guangxi: a new designation as China’s gateway province to not only South Asia, but the entire Indian Ocean region including the east African coastline. Thus the China-South Asia Expo was born and designated for launch in Kunming.

The Expo grounds are open for the public to browse through mazes of booths promoting a variety of tradable goods mainly from Nepal, Pakistan, India, Laos, Myanmar, Thailand, and Vietnam as well as China (which has the greatest representation at the Expo), but the real action is happening far from the Expo site.

Top level ministers, business leaders, and heads of industrial organizations from around the region are meeting at locations undisclosed to the public to negotiate multilateral trade agreements, sign business deals, and iron out the obstacles that currently block the flow of goods and people through the region at logistical chokepoints like China’s border nodes with Vietnam, Laos, and Myanmar.

On the agenda is a renewed discussion of highway and rail linkages between Yunnan and India via Myanmar and Bangladesh. This link will cut through and over the Himalayan foothills on some of Earth’s most rugged terrain. The route also will pass through Myanmar’s militarized Kachin state. India tabled the discussion of this strategic pathway in 2009, and construction is unlikely to begin any time soon.

Also on the agenda are talks to establish cross-border economic zones (CBEZs) between China (Yunnan) and Myanmar at Ruili and China (Yunnan) and Laos at Mohan/Boten. However, China’s success in establishing robust and productive CBEZs with its neighbors is extremely limited. Since 2007, both funding and political capital in both China and Vietnam has been earmarked for a CBEZ at the Hekou/Lao Cai border area in southeastern Yunnan and Vietnam’s northernmost province. Despite years of negotiations, the two sides have yet to settle on the structure and purpose of the CBEZ – they have wavered between ideas such as an export processing zone, a high technology industrial park, and Guangxi’s Commerce department chief declared at a 2011 negotiation that his vision for the zone would emulate the Eurozone. Clearly, while decision makers lack technical knowledge to solve this problem (and consistently crowd out the private sector in the process) the negotiations lose steam due to a failure to identify or fabricate a true economic purpose for the CBEZ. Tenuous diplomatic relations between Vietnam and China also contribute to the stalemate.

Will the discussions with Laos and Myanmar meet similar fates?

Conspicuously absent from the slate of Expo related meetings and discussions is participation from the civil society groups, academics, and the private sector outside of the region. Issues such as global warming, environmental degradation, food security, urbanization, and energy and water resource management are beginning to drive political agendas in both China and the region. Sustainable economic development in China, Southeast Asia, and South Asia cannot proceed forward without including discussion of these key issues and without reaching out to a broader base of stakeholders who are already deeply rooted in the region.

The ExSE blog team will continue analysis of the China-South Asia Expo throughout the weekend. The Expo concludes on Monday, June 10.